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Economic Arguments – Industry Aviation industry emphasises: Jobs – but read Brendon Sewill*, Jeremy Birch and some basic economics about opportunity costs and efficient labour markets. Need for business connectivity – but UK business accounted for just 9% of UK air passengers in 2009 and are not price sensitive. Overseas tourists – but overseas tourists accounted for just 23% of air passengers in 2009 and are only slightly price sensitive, * Airport jobs: false hopes, cruel hoax, Sewill, Brendon, AEF, March 2009

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Our Economic Arguments Jobs: One mans airport job is an eventual redundancy notice in the domestic tourism industry. Over 2 million jobs depend on UK tourism compared to 180,000 on aviation) UK plc: How does it benefit the British economy to help an Irish airline which buys American planes in order to transport millions of British people to spend their disposable income in other countries? International competitiveness: So why is Japan, an island trading nation like the UK but with twice our population and twice our GDP, able to compete so well internationally with so much less runway capacity than the UK?

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So whos right? 100 economists will have > 100 different opinions Its not about winning a Nobel Prize for economic theory – its about winning hearts and minds Our arguments must aim to convince the media, politicians and other opinion formers, and the public We may need to be unashamedly tabloid in our approach

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Price Elasticity of Demand UK Leisure = - 1.0 Foreign Leisure = - 0.2 Source – UK Air Passenger Demand and CO 2 Forecasts, DfT, Jan 2009. In other words, if air fares increase by 10% UK leisure demand will fall by 10% but foreign leisure demand will fall by only 2%. This effect is amplified by the fact that the UK leisure sector is almost three times bigger than the foreign leisure sector. Thus higher air fares (e.g. As a result of higher APD can have a very large dampening effect on outbound tourism and yet hardly affect inbound foreign tourist numbers.